How Barclays Ensured That Everyone Would See Their Confidential Tax Avoidance Documents

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The lawyers never seem to get the fact that some things just aren’t that interesting until they try to force people not to talk about them. And that’s certainly the case with London headquartered Barclays bank, which has fought the UK newspaper The Guardian all week over the publication of internal Barclays Bank documents alleged to detail huge tax avoidance schemes by the company that total more than $16 billion.

Last Wednesday a UK judge, in an emergency 2 AM session, granted an emergency temporary injunction requiring the documents to be removed from The Guardian website. The order was complied with, and yesterday the ban was upheld.

The problem, of course, is that the documents have already spread around the Internet, and they are certainly no longer confidential. And now that we aren’t supposed to be reading them, they become infinitely more interesting.

As of the time of the ban the documents had been accessed by just 127 people. Now, two days after the legal ban, a website that continues to host the documents, Wikileaks, has been overloaded with traffic. And we’re publishing them here as well.

The seven documents highlight Barclays structured finance deals that use a variety of complicated finance vehicles to move profits to low tax countries and generally away from the UK. Parts of the documents were disclosed to the UK tax authority. But portions of the documents containing legal advice on the risk of challenge to aspects of their schemes were removed before disclosure. A 2007 scheme called Project Knight proposed to avoid taxes by structuring more than $16 billion in loans through an elaborate offshore network involving entities in the Cayman Islands, Luxembourg and the U.S.

As to why we’re publishing them, I agree with The Guardian’s editor Alan Rusbridger that the precedent being set by this UK court has a chilling effect on free speech and public debate. Courts should understand that the purpose of the press is precisely to uncover issues like these, and that trying to gag the press will only spread the information more efficiently. And I also have the opinion that if you believe in something, you need to stand shoulder-to-shoulder with the guys fighting on your side, or not complain when the same thing happens to you.

The Guardian’s editor, Alan Rusbridger, told the court in a witness statement: “I considered these documents to be of the highest significance in the debate about tax avoidance. They revealed at first hand the processes involved in structuring extremely complex and artificial tax avoidance vehicles; how lawyers and accountants worked together to exploit loopholes in government legislation; and the degree to which they are sanctioned at the highest levels within Barclays.

“My decision was taken on the day the chancellor, Alastair Darling, intervened in the debate on this issue, telling parliament: ‘I have asked HM Revenue & Customs to publish shortly a draft code of practice on taxation for the banking sector – so that banks will comply not just with the letter but the spirit of the law.’ ”

The Rusbridger statement quoted one reader’s online posting yesterday, which said: “I was lucky enough to read through the first of the Barclays documents at 1:30am last night. I will say it was absolutely breathtaking, extraordinary. The depth of deceit, connivance and deliberate, artificial avoidance stunned me.”

Rusbridger said: “This incipient debate has been choked off – doubtless intentionally – by the injunction from Barclays, thus chilling free expression on a matter of public importance.”